You'll destroy the E30 all-wheel drive setup. There's no way those delicate transfer cases can withstand the torque you're talking about. You would probably have to use the E34 525iX Touring all-wheel drive system, but who knows how expensive that would be.

Stick to rear wheel drive, and save yourself about $15,000 and years worth of headaches.

Turbocharge a standard 535i engine. Blacky has a 4.0L M1 engine--good luck finding an M1 engine block (M88, right?) for less than $5000. If you find a garage/tuner that has a dyno and extensive knowledge of turbos, you can build a 400hp turbo M30 engine easily. Then you can tinker with it to get 500hp. If you want naturally aspirated power in the 500hp range, you'll need a big-block or a $20,000 racing E34 M5 engine. The parts required to make a US 3.5L S38 into a Euro 3.8L are about $12k. Good luck.

The car would be classed as an A Mod car for BMW CCA Club Racing. You wouldn't be able to get it into the Super-Mod, because that's for ex-touring cars. The car would be uncompetetive, because any turbo or supercharged E36 M3 with the Lightweight's aerodynamic package (also A Mod) would smoke you through the turns. The E28 is too heavy, too high, too old, and unaerodynamic. The E36 has a much better weight distribution, the engine sits farther back in relation to the front wheels, the rear suspension is a multilink, the aerodynamics are far superior, the rack-and-pinion steering is more precise, and you can fit ungodly huge wheels and tires. Most run 17x8F and 17x9R with slicks. The E36 chassis is stiffer, but you could design a rollcage for any car to enhance its stiffness.

It's a losing battle. I know how much you love the E28, but it's just a waste of time to try to make such an old concept competetive. The past 10 years have seen some incredible developments from BMW and many other car companies. Even the invincible E30 M3 has been eclipsed by comparably modified E36's. It's sad, but that's the circle of life.

Just think about Russ C. Even though his E28 is one of the most highly tuned E28's in the country (Dinan treament--Turbo and Stave IV suspension) the STOCK E39 M5 blew him away. Just think about a tuned E39 M5. You could even try it with an E39 540i.

Sorry to burst your bubble. If you want to be competetive, then get an E36 325/328 and make yourself a track car. For under $30,000, you could have a class-winning car. Get a 328 aluminum block, install an M3 crank, M3 head (US or Euro), cams, software, exhaust, front splitter, rear wing, lightweight racing wheels and tires, and go to a few racing schools. It would be much more satisfying to blow $30k that way than to hassle with a 20+ year old design that's not aerodynamic and isn't the best racing platform to begin with. The E36 would give you a 300hp naturally aspirated engine in a 2500lb (or lighter) package that handles like nobody's business. You could also do this with an E30 M3 for less than $30k. You could spend some cash turbocharging it, and then you'd have 400+ HP to play with. The aluminum M52 block is lighter than the cast-iron 4-cylinder block.

Think of it this way--how long have you been into E28's--10 years? That means that the E28 was 8 years old at the time. The E36 is now 8 years old, too. Maybe it's time to switch. I don't think you need to abandon the E28--I have two. But for racing and track purposes, the E28 is at best and instructional car.